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If a company’s CVP analyses showed it was not operating at break-even, where on the financial...

If a company’s CVP analyses showed it was not operating at break-even, where on the financial statements might one be able to see this impact (i.e., specific line items on the statements)?

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Answer #1

CVP analysis stands for Cost Volume Profit anlysis. Necessary elements of the anlysis are: Selling price per unit, Fixed Cost, Variable Cost/ unit.. No. of Units sold can be assumed to plot CVP analysis

Break even point means Total cost (Fixed + Variable) = Sales, and zero margins made. The section showing profit means Sales exceed Total cost and vice versa leads to loss

So, the concerned financial statment in discussion is INCOME STATEMENT and items are: Sale proceeds, total fixed expenses and total variable expenses  

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